Tax Deduction Solutions

For manufacturers looking to make a machinery investment, the time has never been better.

The “Tax Cuts and Jobs Act”, signed into law in 2017, provides two key opportunities for businesses to maximize their deduction and get more from their machinery investment.

OPTION 1: SECTION 179

Designed for businesses who are not investing over $3,050,000 in capital equipment per year, this deduction allows many businesses to write off the entire cost of the machinery they purchase, lease or finance in the year it is delivered, up to $1,220,000.

OPTION 2: BONUS DEPRECIATION

Designed for businesses investing over $1,220,000 in capital equipment, as there is no limit on this deduction. In 2024 businesses can write off 60% of the cost of the machinery they purchase, lease or finance that it is delivered this year. Bonus depreciation can be applied to the remaining amount left over after the Section 179 deduction is maximized.

The full 100% deduction expired on 12-31-2022. After that, first-year bonus depreciation goes down as follows:

  • 80% of equipment cost placed in service in 2023.
  • 60% of equipment cost placed in service in 2024.
  • 40% of equipment cost placed in service in 2025.
  • 20% of equipment cost placed in service in 2026.
  • All bonus depreciation expires 12-31-2026.

QUALIFYING INVESTMENTS INCLUDE:

Any of the following items that have been purchased or leased on a $1.00 buyout lease:

  • New and used machinery
  • Computers and off-the-shelf software
  • Tangible personal property used in business
  • Office furniture and fixtures

To qualify for these deductions, equipment must be delivered by the end of the year.

If you have any questions regarding these deductions or would like more information on how these deductions can actually pay for your first year’s lease payments on the machinery you are considering, contact the leasing department at Stiles Machinery. 

Questions? Talk to us.

Jeff Bates, Leasing Manager
p 586-764-3415

Nick Rusche, Leasing Specialist
p 616-699-3873

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